Nevada watching from the sidelines as Wire Act court battle plays out

As New Hampshire heads to federal court in an effort to squash the U.S. Department of Justice’s planned changes to the Federal Wire Act, the state is finding its support growing.

Last week, Michigan and New Jersey filed amicus (friend of court) briefs in support of the New Hampshire Lottery’s lawsuit to halt the Justice Department from implementing an Office of Legal Counsel reinterpretation of the 58-year-old law. Legal experts believe the opinion, which erases a seven-year-old ruling, could end online poker, stop Internet sales of lottery tickets, and halt mobile sports wagering.

As first reported last week by Online Poker Report’s Dustin Gouker, 11 states and the District of Columbia have filed briefs supporting New Hampshire’s legal action; Pennsylvania also sought to intervene and join the case but was denied by the court.

One state is conspicuously absent from the game so far: Nevada.

The Gaming Control Board and the Attorney General are watching the action from the sidelines.

“We’re engaged in monitoring the litigation,” a spokesman for the Control Board said in an email. “The board and the Attorney General’s office have been in consistent communication with other interested parties, including states and licensees.”

Nevada Attorney General Aaron Ford

A spokeswoman for Nevada Attorney General Aaron Ford released a similar statement.

“Our office has been closely monitoring this issue and has met with gaming licensees and other stakeholders to consider the various avenues of litigation,” the statement read. “While Nevada has a great interest in the outcome of the pending litigation, our state-specific interests are distinctive from others with primarily lottery interests. As we continue to evaluate this matter in consultation with the Gaming Control Board and the Governor’s Office, we will do so with the unique needs and interests of Nevada in mind.”

During a discussion about the Wire Act at UNLV’s Boyd School of Law last week, longtime gaming attorney turned law professor Tony Cabot hinted that Nevada’s involvement in the legal fight was somewhat crucial.

The outcome of New Hampshire’s case, along with a similar lawsuit filed by one of the lottery’s Internet system and technology providers, will eventually be appealed to the First Circuit Court, Cabot said.

If New Jersey and Pennsylvania follow through with threatened lawsuits, the case would land in the Third Circuit. Any legal action brought by Nevada would end up in the Ninth Circuit.

Cabot said having several Circuit Courts rule on the matter would almost assuredly land the Wire Act case in front of the U.S. Supreme Court.

Gaming insiders have said that the casino industry believes state lotteries have the best chance to kill the Wire Act revisions, since two states that offer online lotteries – New York and Illinois – filed the original challenge to the Wire Act. That action led to the 2011 reinterpretation by the Office of Legal Counsel.

Other signers to the Michigan amicus brief include the Kentucky Lottery Corporation, the Tennessee Education Lottery Corporation, the Virginia Lottery, the Rhode Island Lottery, the Colorado State Lottery Division, the North Carolina Education Lottery, the states of Delaware, Idaho, Vermont, Mississippi, Alaska, and the District of Columbia.

New Jersey, in its amicus brief, said the new Wire Act reinterpretation would wipe out the state’s Internet gaming business, which generates $352.7 million in annual revenue and $60 million in direct gaming taxes.

“In addition, other aspects of New Jersey’s iGaming industry involve interstate use of the wires, notwithstanding the best efforts of the regulators, operators, and participants,” lawyers wrote. “It is simply the nature of the Internet that even purely intrastate transactions may travel through channels that cross state lines.”

A few Nevada gaming leaders have voiced concerns about the opinion.

MGM Resorts International Chairman and CEO Jim Murren called it “an absurd, poorly written and unenforceable opinion.” Scientific Games CEO Barry Cottle said the “new opinion is wrong on the law and that Justice actually got it right in its 2011 opinion.” Boyd Gaming CEO Keith Smith said the opinion “certainly got our attention.”

Publicly, Nevada most gaming leaders have adopted a wait-and-see approach until the Justice Department makes a final determination. Some quietly hope that new U.S. Attorney General William Barr, a state’s rights advocate, will simply opt not to enforce the opinion, just as the department doesn’t opt to prosecute for simple possession of marijuana.

Nevada gaming regulators, and the state Attorney General, have assumed a similar stance.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter